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Zebrowski v. Wells Fargo Bank

June 21, 2010

JAMES AND MELISSA ZEBROWSKI, PLAINTIFFS,
v.
WELLS FARGO BANK, N.A., AS SUCCESSOR IN INTEREST TO WELLS FARGO HOME MORTGAGE, DEFENDANT.



The opinion of the court was delivered by: Joseph H. Rodriguez United States District Judge

MEMORANDUM OPINION & ORDER

This matter comes before the Court on a Motion for Summary Judgment [Dock. Entry No. 43] filed by Defendant Wells Fargo Bank, N.A. Plaintiffs James and Melissa Zebrowski commenced this action for damages allegedly incurred from Defendant's inaccurate mortgage services. They have opposed the motion for summary judgment as to Count IV ("Negligence"), Count X (violation of the New Jersey Consumer Fraud Act), and Count XI*fn1 (violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2602) of the Amended Complaint [Dock. Entry No. 17]. The Court previously dismissed Counts VI ("Abuse of Process"), VII ("Violation of Civil Rights"), VIII ("Use of Process"), and IX ("Frivolous Action") pursuant to Federal Rule of Civil Procedure 12(c) [Dock. Entry Nos. 34, 35]. As part of the briefing of the instant motion [Dock. Entry No. 52], Plaintiffs have withdrawn Count I (violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681), Count II ("Fraud"), and Count III (Breach of Contract"). While Plaintiffs did not expressly concede summary judgment on Count V ("Breach of Covenant of Good Faith and Fair Dealing"), their opposition brief did not discuss that cause of action.

I. Jurisdiction

Jurisdiction over this civil action is premised on the existence of a federal question. See 28 U.S.C. § 1331. Federal question jurisdiction exists in "all civil actions arising under the Constitution, laws, or treaties of the United States." Id. The Court has supplemental jurisdiction over the remaining state-law claims. See 28 U.S.C. § 1367(a).

II. Factual Background

Plaintiff James Zebrowski procured a mortgage and note from Defendant on December 13, 2002. The loan documents prescribed that Defendant would pay Plaintiffs' real estate taxes from an escrow account. Under the terms of the loan, Mr. Zebrowski was required to make monthly payments of principal and interest totaling $1,307.07 until February 2010. He was also initially responsible for making monthly escrow payments to fund property taxes and insurance.

Plaintiffs allege that Defendant failed to timely pay the taxes in 2003 and 2005. (Am. Compl. ¶ 11.) As a result, Plaintiffs received delinquency notices, were charged late fees, and were forced to pay a sum to avoid a threatened tax sale of their property. (Id. ¶¶ 12-13.)

Upon Plaintiffs' request, on April 5, 2005, Defendant granted Mr. Zebrowski an escrow deletion so that Plaintiffs could pay their own taxes. They subsequently failed to pay the property taxes due October 2005 and January 2006. On or about January 10, 2006, Defendant was notified by the relevant taxing authority of the missed payments, and sent a letter to Plaintiffs notifying them of the property tax arrears. The letter asked Plaintiffs to provide Defendant with proof of payment of the delinquent taxes. The letter further noted:

If you have not made this tax payment, we can assist you by paying the full amount of the past due taxes, including all applicable interest/penalty due.

An escrow account will be established on your behalf for the collection of the advance, as well as all future tax bills. Your monthly mortgage payment will increase to repay the advance and to collect for a monthly escrow deposit.

At his deposition, Mr. Zebrowski stated that mail service at his home was uninterrupted during 2006. A second letter notifying Plaintiffs of the property tax arrears, requesting proof of payment, and noting that an escrow account would be created was sent on February 16, 2006. Plaintiffs failed to respond to either letter, and never sent proof of payment of the property tax arrears.

As a result of Plaintiffs' failure to pay their property taxes or even respond to Defendant's correspondence, on March 13, 2006, Defendant paid taxes due October 2005 ($1,868.00), January 2006 ($1,728.90), and April 2006 ($1,728.89), as well as interest and penalties of $129.47. That same day, Defendant notified Plaintiffs in a third letter that an escrow account had been reestablished to pay for delinquent and future taxes. The letter specifically noted:

An escrow account has been established on your behalf for the collection of the amount advanced to bring your taxes current, as well as to pay all future tax bills for the life of this loan. Your monthly mortgage payment will increase to repay the advance and to establish the escrow account. Defendant also sent Plaintiffs an Escrow Disclosure Statement and Notice of New Mortgage Payment on March 15, 2006. The Disclosure Statement notes that mortgage payments would increase to $2,472.66 beginning May 1, 2006, to cover $1,307.07 in principal and interest, $599.48 in escrow, and $566.11 in prorated escrow shortage.

Upon receipt of the new payment information, Mr. Zebrowski placed a telephone call to Defendant on March 17, 2006, and claimed that the escrow account had been erroneously created because he paid the property taxes due October 2005 and January 2006, and that he had cancelled checks evidencing payment. Plaintiffs have since admitted that these contentions were false because, in fact, Plaintiffs did not pay the taxes due October 2005, January 2006, or April 2006. Mr. Zebrowski repeated this false statement on a number of subsequent calls, including calls on April 10, 2006, May 16, 2006, and May 24, 2006, and thereafter. During the ...


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